Humana Pays $750,000 to Resolve Wisconsin Complaints

September 11, 2008

Humana Insurance Co. paid the state of Wisconsin $750,000 to settle complaints about its marketing of Medicare products, customer service and other practices.

The payment settles an investigation by the Office of Insurance Commissioner that alleged the health insurer violated numerous state laws and regulations. It is the second largest forfeiture ever assessed by Wisconsin insurance regulators.

Humana Insurance Co. is the Green Bay-based subsidiary of Humana Inc. of Louisville, Ky., one of the nation’s largest health insurers. The subsidiary is the biggest provider of Medicare prescription drug plans in Wisconsin and among the biggest providers of Medicare Advantage plans, alternatives to traditional government-run Medicare.

The state’s investigation, conducted last year, found numerous problems with the company’s marketing of Medicare products, its handling of claims and underwriting. Some of the problems hadn’t been addressed since a similar review in 2002, investigators said.

The investigation found Humana had paid 40 insurance agents commissions for selling Medicare plans to Wisconsin customers between 2005 and 2007 even though they were not licensed in Wisconsin as required under state law. Unlicensed agents also accepted applications from Wisconsin customers, the review found.

Humana denied that it violated Wisconsin laws but agreed to implement more than 40 recommendations made by regulators.

“With this settlement, we protect our senior citizens by addressing issues with marketing of Medicare Advantage and Medicare Part D products,” Insurance Commissioner Sean Dilweg said in a statement. “The settlement also resolves long-standing issues with company claim adjudication, customer service and underwriting practices.”

Humana spokeswoman Amanda Dvorchak said the company is moving quickly to address the problems but downplayed the scope of them. The investigation only found problems with 1 percent of its agents, who accounted for less than 0.1 percent of the plans sold in Wisconsin, she said.

“While fewer than 0.1 percent of plans sold are at issue, even one such error is too many, and we are committed to addressing these issues quickly and thoroughly,” she said. “We take seriously our obligation to seniors and all Humana members.”

The investigation also faulted Humana for failing to pay interest on some adjusted claims and for taking too long to settle customer grievances.

The company paid a $500,000 fine last year to the state of Oklahoma to settle a similar complaint about unlicensed agents selling Medicare plans.

Earlier this year, Congress passed a law barring insurance sales representatives from making door-to-door solicitations after thousands of seniors complained they were misled into leaving the government Medicare program for private Medicare Advantage plans.

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